Friday, December 27, was meant to be the start of a relaxing holiday weekend for many. However, thousands of small business owners using Bench, a prominent accounting and tax startup, found themselves entangled in chaos as the platform unexpectedly shut down.
From its launch in 2010, Bench was known for its intuitive platform and customer-focused approach, raising over $113 million from investors. The sudden closure left its website accessibly only through a shutdown notice, leaving businesses without their accounting and tax documents.
This abrupt closure affected not only the customers but also Bench’s 400 staff members, who were laid off without any notice or severance. Many former employees reported that emails sent to them bounced back, indicating the suddenness and rudimentary nature of the shutdown.
One perplexed customer, Justin Metros, co-founder of Radiator, summed up the situation: “I was not aware of that. I’ve never seen anyone just shut down like that. That’s crazy.”
Bench’s Automation Challenges
Bench positioned itself as a tech-savvy player in the accounting industry, promising automated solutions to ease the workload of small and mid-size business owners. The company claimed over 12,000 customers by the time it closed its doors.
However, the rollout of AI and automation tools from Bench faced significant hurdles. According to former employees, the theoretical benefits of automation were not translated into practical success. Bench’s reliance on AI caused delays in processing books, as tasks were passed among various teams instead of being managed by dedicated staff.
These inefficiencies led to customer frustration and attrition. Some clients were still waiting for their 2023 financial records even in September 2024, well past critical tax deadlines.
Turbulence in Leadership
Compounding the company’s execution issues was a turbulent period in Bench’s executive leadership. In 2021, co-founder Ian Crosby left after a disagreement with board members over strategic decisions. Crosby accused unnamed directors of forcing him out to install a non-founder CEO.
“I hope the story of Bench goes on to become a warning for VCs that think they can ‘upgrade’ a company by replacing the founder. It never works,” Crosby wrote on LinkedIn after the shutdown.
Despite efforts to stabilize the company, another leadership change occurred in November 2024, bringing Adam Schlesinger, an executive-in-residence at Inovia Capital, one of Bench’s investors, on board as CEO.
An Unlikely Revival
Despite these resuscitation efforts, on December 27, Bench abruptly ceased operations. Schlesinger attributed the shutdown to Bench’s venture debt being called by a bank.
However, Schlesinger noted that after the shutdown, media coverage catapulted Bench into the spotlight. This unexpected attention drew potential buyers, including Employer.com, which advertised its intent to acquire Bench on Monday morning.
Employer.com quickly secured a deal to purchase Bench, albeit for an undisclosed sum. In terms of its team, Employer.com is extending job offers to hundreds of former Bench employees.
Uncertainty Remains
Though Employer.com promises to continue servicing Bench’s customers and honoring existing contracts, some uncertainties remain.
For instance, concerns persist regarding the long-term sustainability of Bench. The last-minute acquisition might pose challenges for integrating the company seamlessly.
Moreover, hiring back staff on short contracts, some for only 30 days, has raised questions about the stability of committed services.
Despite these reservations, Employer.com remains confident in its ability to salvage Bench. According to Matt Charney, the company’s CMO, “While the deal happened quickly, it involved multiple legal firms, and we feel very comfortable with Bench’s reputation and track record.”
Employer.com also plans to leverage Bench’s customer base to accelerate the acquisition of essential accounting expertise.
Conclusion
The abrupt closure of Bench serves as a cautionary tale for both founders and venture capitalists, highlighting the importance of strategic leadership continuity and cautious implementation of technological innovations. For those affected by this upheaval, the promise of a swift acquisition by Employer.com offers a glimmer of hope.
However, the broader implications and uncertainties surrounding Bench’s sustainability underscore the need for vigilance and proactive planning when navigating the unpredictable waters of the startup ecosystem.
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